Asian shares got the week off to a hesitant start on Monday as surging coronavirus cases in Europe and the United states undermined the global outlook, while China’s leaders meet to ponder the future of the economic giant.
The U.S. has seen its highest ever number of new COVID-19 cases in the past two days, whilst France also set unwanted case records and Spain announced a state of emergency.
That combined with no clear progress on a U.S. stimulus package pulled S&P 500 futures down by 0.6%. EUROSTOXX 50 futures eased 0.7% and FTSE futures 0.4%.
The U.S. presidential election will again loom large as markets move to price in the chance of a Democratic president and Congress, which would likely lead to more government spending and borrowing down the road.
The dollar was flatlining on Monday, having fallen broadly last week. The euro was holding at $1.1836 and just under its recent top of $1.1880, while the dollar was pinned at 104.86 yen and not far from last week’s trough of 104.32.
The dollar index was a fraction firmer at 92.904, after shedding almost 1% last week.
In commodity markets, gold edged down 0.1% to $1,898 an ounce.
Oil prices fell further in anticipation of a surge in Libyan crude supply and demand concerns caused by surging coronavirus cases in the United States and Europe.
Brent crude futures lost 73 cents to $41.04 a barrel, while U.S. crude also fell 73 cents to $39.12.
Stock prices in London are seen opening lower on Monday amid fears over coronavirus cases spiking in Europe and more countries imposing new measures against the pandemic.
The new wave already had forced governments in several countries including the UK, Germany and France to reimpose tough restrictions to prevent the disease from spreading.
The WHO has warned that some countries are on a “dangerous track”, with too many witnessing an exponential increase in cases, and called on countries to take further action to curb the spread of the disease.
A packed week for monetary policy sees three major central banks hold meetings. The Bank of Canada and Bank of Japan are expected to hold fire for now, while the market assumes the European Central Bank will sound cautious on inflation and growth even if they skip a further easing.
Data due out Thursday is forecast to show U.S. economic output rebounded by 31.9% in the third quarter, after the second’s quarter’s historic collapse, led by consumer spending.
This week’s marquee earnings and economic data reports will mostly take place later in the week, with the majority of the Big Tech or FAANG (Facebook, Amazon, Apple, Netflix and Google’s parent, Alphabet) stocks reporting earnings after market close on Thursday.
In a busy UK earnings calendar this week, there are third quarter results due from lender HSBC and oil major BP on Tuesday and drugmaker GlaxoSmithKline on Wednesday. On Thursday oil major Royal Dutch Shell reports third quarter earnings, followed by state-backed lender NatWest on Friday.
These events have the potential to influence the markets which means there is plenty of trading opportunities.
Today’s High Impact Events
The times below are GMT+2.
Monday 26th October
16.00 – U.S. New Home Sales
Potential instruments to Trade: USD Crosses.
16.30 – SNB Chairman Jordan Speaks
Potential instruments to Trade: CHF Crosses.
23.45 – New Zealand Trade Balance
Potential instruments to Trade: NZD Crosses.
Tuesday27th October
14.30 – U.S. Core & Durable Goods Orders m/m
Potential instruments to Trade: USD Crosses.
15.30 – U.S. HPI m/m & S&P/CS Composite-20 HPI y/y
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